CIRM Wharton Training Programme Scaling Micro Insurance in Developing Countries

CHENNAI, India - April 20- 26, 2009

Microinsurance has been recognized worldwide as a potential instrument for promoting safety nets to extend financial inclusion to poor households. However, contrary to general expectations, micro insurance delivery has not achieved substantial scale as compared to the micro finance movement. Insurers in India operate in a regulatory environment that requires them to achieve priority sector targets and meet rural and social sector obligations. Though, there clearly exists an untapped and largely unexplored market for insurance in India, the ability of risk carriers to operate microinsurance schemes viably is constrained by the lack of reliable data and the absence of alternate means of risk assessment. Adequate emphasis on research and development of suitable risk management systems is critical to make markets work for the poor.

The Centre for Insurance and Risk Management (CIRM) at the Institute of Financial Management and Research (IFMR), India in collaboration with the Wharton School, University of Pennsylvania, organized a week long training programme to explore the use of rigorous theoretical models for pricing insurance products for data-scarce markets, design fair microinsurance contracts and institute robust control systems to facilitate the entry market based institutional risk carriers and sustainability of microinsurance in India. CIRM is an action research; product development group focused on developing and delivering market ready micro insurance and risk management services for vulnerable sections in India. Prof. Jeremy, Assistant Professor, Wharton quotes,’ Through a wide variety of initiatives, the Wharton School at the University of Pennsylvania has long had a commitment to studying how to manage society’s most important risks. Our collaboration with CIRM opens a meaningful new chapter in this broader endeavor. Poverty and vulnerability are tightly linked, and CIRM brings innovative risk management ideas, and particular expertise in emerging markets, to the partnership with Wharton. We look forward to future work together that will press forward the research frontier, engage with micro insurance practitioners about the newest insights, and advance the security of households around the world’.

Spread over five days of classroom training and two days of field exposure, the workshop titled ‘Scaling Micro Insurance in Developing Countries’ was offered jointly by faculty from the Department of Insurance and Risk Management at Wharton such as Prof. Neil Doherty (Frederick H. Ecker Professor of Insurance and Risk Management, Wharton School), Prof Richard Phillips (Bruce A. Palmer Professor and Chair, Risk Management and Insurance, Georgia State University) and Prof. Jeremy Tobacman (Assistant Professor of Business and Public Policy, Wharton School), International Sector Experts including Denis Garand (Denis Garand and Associates), Vijay Kalavakonda (World Bank), Mosleh Uddin Ahmed (Independent Consultant), KN Rao (Agriculture Insurance Company of India), Harini Kannan (Swiss Re), Pompy Sridhar (ICICI Lombard) and Gautam Bharadwaj (IIEF) and CIRM Team including Rupalee Ruchismita (Executive Director, CIRM) and Dr. Anupama Sharma (Consultant- Livestock, CIRM).

The programme hosted 35 participants from across seven countries including India, Pakistan, Thailand, Bangladesh, Switzerland, Tanzania and Haiti from 20th to 26th April, 2009. The participants largely consisted of senior officials from Insurance companies, Regulators, Non Governmental Organizations and Development research agencies among others. According to Ashutosh Mishra, VP (Utility), SBI Life Insurance Company,’The Programme was very comprehensive in terms of both coverage and depth in exploring existing practices and finding out new paradigms for scaling micro insurance. A mind opener for all practioners of micro insurance!’

The training objectives were to draw from theoretical models of insurance and risk management and apply them to the practice of microinsurance specifically in the Contract Designing and Pricing in health, agriculture, livestock, catastrophe and micro pensions. Joy C Kemibaro, CEO, First Micro Insurance Agency, Tanzania describes the experience as invaluable. ‘The training experience was insightful as various aspects relating to the theoretical and practical aspects of microinsurance were covered. It was valuable for me to meet with peers from around the globe and share best microinsurance practises through group discussions. The tools I will take away with me are the case studies, catastrophe cover, crop and livestock insurance, and microinsurance performance measures. The overall aim will now be to continue steering and promoting microinsurance initiatives in my country through the delivery of viable solutions that safe guard the income and savings of the poor’, she says.

CIRM- Wharton plan to maintain the collaboration over the next few years. According to Sandhya Karpe, Senior Director, Wharton Executive Education, ‘The Wharton School is deeply committed to having a positive social impact around the world, and our work with CIRM supports our social mission. Wharton Executive Education has launched this program in partnership with CIRM that will run in different developing countries over the next few years. This program will enable practitioners in the area of micro-insurance to develop products for the very poor who have little or no insurance protection, that are based on sound principles of insurance and risk management. Wharton is very excited about this project and looks forward to working with CIRM’.

Rupalee Ruchismita, Executive Director, CIRM adds, ‘As a sector enabler, CIRM aims to facilitate greater innovation and scale in micro insurance. This training is an important effort in this direction. The training pooled in and trained human resources within key international micro insurance innovators to enable them to offer a wider range of actuarially sound micro insurance products. We hope this act as country calatysers. We will offer this training bi annually for the next three years’.

For more information, please contact: Janani Akhilandeswari, Consultant, CIRM janani.akhilandeswari@ifmr.ac.in +91-9381517612 ifmr.ac.in/cirm/

Source: IFMR-CIRM

For more information, please contact: Janani Akhilandeswari, Consultant, CIRM, janani.akhilandeswari at ifmr.ac.in, +91-9381517612